x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year endedApril 30, 2013

o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 000-19086

Drinks Americas Holdings, Ltd.

(Exact name of small business issuer as specified in its charter)

Delaware

87-0438825

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

4101 Whiteside, Los Angeles, CA 90063

(Address of principal executive offices)

(323) 266-8500

(Issuer's telephone number)

Securities registered under Section 12(b) of the Exchange Act: (none)

Securities registered under Section 12(g) of the Exchange Act: Common

Stock, $0.001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yeso No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the quarter ended April 30, 2013 was approximately $0.03. As of January 16, 2015, there were 2,782,982,992 shares of Common Stock, par value $0.0001 per share, outstanding.

This is the annual report of Drinks Americas Holdings, Ltd. (the “Company”, “we”, “us”, and “our”, unless the context indicates otherwise) covering periods as of April 30, 2013. Readers should be aware that some aspects of this Annual Report on Form 10-K differ from other annual reports. Notably, it reflects the events, management, and financial numbers as of April 30, 2013, and not since then. Accordingly, this annual report is intended to be a historical document disclosing the status of the Company as of April 30, 2013 and includes subsequent events through the date of this filing.

Our disclosure and analysis in this Report contain forward-looking statements. Certain of the matters discussed concerning our operations, cash flows, financial position, economic performance and financial condition, including, in particular, future sales, product demand, competition and the effect of economic conditions include forward-looking statements within the meaning of section 27A of the Securities Act of 1933, referred to herein as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, referred to herein as the “Exchange Act”.

Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” and similar expressions are forward-looking statements. Although we believe that these statements are based upon reasonable assumptions, including projections of orders, sales, operating margins, earnings, cash flow, research and development costs, working capital, capital expenditures, distribution channels, profitability, new products, adequacy of funds from operations and other projections, and statements expressing general optimism about future operating results, and non-historical information, they are subject to several risks and uncertainties, and therefore, we can give no assurance that these statements will be achieved.

Readers are cautioned that our forward-looking statements are not guarantees of future performance and the actual results or developments may differ materially from the expectations expressed in the forward-looking statements.

As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainty of estimates, forecasts and projections and may be better or worse than projected. Given these uncertainties, you should not place any reliance on these forward-looking statements. These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this filing to reflect events or changes in circumstances or changes in expectations or the occurrence of anticipated events

We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. You are advised, however, to consult any additional disclosures we make in our Form 10-K, Forms 10-Q and Forms 8-K reports to the SEC. Also note that we provide a cautionary discussion of risk and uncertainties under the caption "Risk Factors" in this report. These are factors that we think could cause our actual results to differ materially from expected results. Other factors besides those listed here could also adversely affect us. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995.

On June 9, 2004, Drinks Americas, Inc. (“DA”) entered into an Agreement and Plan of Share Exchange with Gourmet Group, Inc. (“Gourmet Group”) and the shareholders of DA. Prior to entering into this share exchange, Gourmet Group was a company pursuing the acquisition of various operating businesses since our sale of Jardine Foods, Inc., our previous operating entity, in May 2002.

As of March 9, 2005, we, as Gourmet Group, issued an aggregate of 2,864,253 shares of our common stock (or 87.28% of the outstanding common stock on a fully-diluted basis) to DA's shareholders, an additional 120,000 total shares of our common stock (or 3.66%) to two advisors to DA and a total of 26,667 shares of our common stock (or 0.8%) to the four members of Maxmillian Mixers, LLC, a Delaware limited liability company affiliated with DA ("Mixers") in exchange for all of DA's outstanding common shares and DA’s business. Immediately prior to issuing such shares, Gourmet Group (which had previously been a Nevada corporation), by way of merger merged with and into a newly formed Delaware corporation, thereby becoming a Delaware corporation. Gourmet Group changed its name to Drinks Americas Holdings, Ltd., affecting a reverse split its outstanding shares one-for-ten, and authorized up to 1,000,000 shares of "blank check" preferred stock in its new certificate of incorporation. In return for such issuances of shares, we, as Gourmet Group, received all of the outstanding shares of capital stock of DA and all of the membership interests in Mixers. Thus, DA and Mixers became our wholly owned subsidiaries and the business of those subsidiaries constitutes substantially all of our operations at that time. Prior to the share exchange transaction described above, Maxmillian Partners, LLC ("Partners") owned approximately 99% of the outstanding capital stock of DA and immediately after the share exchange became our majority shareholder. Subsequently, Partners distributed its shares pro rata to its 21 members as part of a plan of liquidation. For financial accounting purposes, this share exchange has been recognized as a reverse merger, and accordingly we changed our fiscal year end from June 30 to DA's year-end of April 30th, and all of our historical financial statements prior to the share exchange are those of DA.

On October 15, 2010, the Company affected a 1 for 15 reverse split of issued and outstanding shares of common stock of the Company without changing par value of the stock. On December 27, 2011, the Company affected a 1 for 250 reverse split of its issued and outstanding shares of common stock of the Company without changing par value of the stock. All information contained in this Annual Report on Form 10-K reflects post-split share adjustments for both reverse stock splits.

BUSINESS OVERVIEW

Based in Simi Valley, California, we were founded in 2002 by an experienced team of beverage, entertainment, retail and consumer product industry professionals. We specialize in the marketing and distribution of premium alcoholic and nonalcoholic beverages with an emphasis on utilizing and leveraging associations with iconic brand names, brands with historic origins or entertainers and celebrities.

In June of 2011, the Company entered into an agreement to license and distribute the brands of Worldwide Beverage Imports, LLC ("WBI") in the eastern United States with brands to include KAH Tequila, Agave 99, Ed Hardy Tequila, Mexicali Beer, Chili Beer and Red Pig ale as well as various other products produced and imported by Worldwide Beverage Imports, together with extended credit terms and cash in return for the shares in the Company that would be no greater than 49% of the Company.

On November 1, 2011, the Company amended its agreement with Worldwide Beverage Imports. The Company was granted worldwide distribution rights on both the spirits and beer products of WBI. In connection with the agreement, the Company agreed to issue 2,454,545 additional restricted shares of common stock (the “Additional Shares”) to Worldwide at a purchase price of $0.55 per share in exchange for Worldwide forgiving a $300,000 loan owed by the Company to Worldwide and Worldwide delivering $1,050,000 in inventory to the Company, the sale proceeds of which are to be contributed to the capital of the Company.

Upon the completion of the purchase of the Initial Issuance and the Additional Shares and until one (1) year from the date of the completion of the close of the transaction, the Company agreed not to issue any additional shares of the Company without prior written consent of the Purchaser, provided that the Company may issue certain exempt issuances without the prior written consent of the Purchaser in accordance with the terms of the Purchase Agreement.

As of January 31, 2013, the Company defaulted on its license agreement with WBI and subsequently WBI stopped shipping its KAH tequila and all other products as of January 31, 2013.

As of February 15, 2013, the Company entered into a Beer brokerage agreement with WBI to distribute Rio Bravo, Mexicali and other future brands nationally. From March 1, 2013 to May 15, 2013, the Company worked on a national rollout of Day of the Dead Beer, a craft brewed beer line that is believed to meet the current growing demand for India Pale Ales (“IPA”) and other highly sought after beer styles. Day of the Dead Beer is one of the first craft brewed beers to be imported from Mexico.

As of May 15, 2013, the Company as part of its Beer Brokerage agreement with WBI started a national rollout of “Day Of The Dead Craft Beers” the first line of Craft Beers Imported from Mexico. Initial focus was on 13 states and has grown to 48 states as of this printing and has experienced tremendous acceptance. In addition to its growth, it has won several industry awards including being named the best I.P.A. Craft Beer of Mexico.

The Company as part of its brokerage agreement provides direct retail support and marketing through “on premise taste tests and point of sale posters and other marketing materials. These functions are performed by a third party national marketing firm and are compensated on cases sold as a result of their efforts.

COMPANY

Our Company is a Delaware corporation, our principal place of business is located at 25 W. Easy Street #306, Simi Valley, CA 93065 and our telephone number is (805) 530-2574. Our Company is the exclusive United States broker for a line of premium authentic Mexican beers currently present in over 48 states. Drinks Americas' premium authentic Mexican beer brands include specialty Day of the Dead Craft Beer, Mexicali(TM), Rio Bravo(TM), Red Pig(TM) and Chili Beer(TM), which are all brewed in Mexico's third largest brewery, Cerveceria Mexicana S. de R.L. de C.V., utilizing state of the art processes, fermentation and aging systems. Drinks Americas' brands continue to forge strong connections with consumers through some of the largest retailers and restaurants in the country. For most of 2012 until January 31, 2013, the Company's products were predominantly concentrated on tequila sales. Subsequent to the loss of our tequila license, the above brands have taken over as the main products being offered.

The Company plans to license or purchase other underserved brands to extend the portfolio and provide the clients we serve a broader mix of quality Spirits and other beverages that allows company to take advantage of the relationships we have forged with new profit centers. This is an ongoing effort and new products are continuously evaluated for quality, product integration and ultimately whether they provide a synergy with our core product line.

STRATEGY

Our long-term business strategy is to become the United States broker for leading premium authentic Mexican beers currently present in over 48 states. The Company is the exclusive broker for Mexican Craft Beers in each state in which it operates. Further, the Company endeavors to acquire new brands in the beverage industry to become a leader in the industry. Several of the existing brands have the strategic advantage of being historically iconic. For example, Mexicali Beer has been sold since 1928 in Mexico.

We believe that the consumer awareness of these historical brands and iconic associations give us a marketing advantage that allows for more efficient brand marketing. We believe the public relations impact and resulting media opportunities due to these brand histories and associations cuts across electronic, social and print media formats and delivers an exponential impact in building brand awareness and consumer excitement.

We plan on utilizing our iconic and historic trademark brand strategy and the demonstrated ability of these brands to generate public relations and promotional brand marketing based on their already high level of consumer awareness, to grow and establish these brands. This strategy we believe will result in top line growth with the ability to be profitable in the very competitive beverage categories of spirits, wine and beer.

BEER, WINE AND SPIRITS INDUSTRY OVERVIEW

Beverage Industry Statistics Data:

Note: Numbers are preliminary. A more extensive analysis was released following the Craft Brewers Conference in Denver, CO. from April 8-11, 2014. Another 2012 industry analysis was published in the May/June 2013 issue of The New Brewer, highlighting regional trends and sales by individual breweries.

Total retail dollars from the sale of wine, beer and distilled spirits $113.5 billion

Among the findings of an NPR report on how consumer spending on alcohol has changed over the past three decades, one of the most striking trends is how swiftly wine has surpassed spirits as the stronger drink of choice in the house. Beer still dominates, factoring in for nearly 50% of liquor store purchases in 1982 (48.9%) and again in 2012 (47.7%). But whereas in the early ’80s the rest of alcohol purchases were dominated by liquor—34.6% of store sales, compared to 16.2% for wine—by 2012, wine has now taken the lead in sales. Nowadays, wine accounts for 39.7% of store sales, while liquor represents a mere 12.6%. It’s surely no coincidence that the uptick in wine sales has occurred during a long stretch when wine has slowly sloughed off its snobby reputation, and when wine has grown in popularity particularly among moms and women in general.

But Recently, Liquor Sales Have Picked Up Steam

The liquor industry reported a 4% increase in liquor sales in 2011, with particularly strong increases in exports of American spirits and high-end “super premium” beverages (both up more than 10%). The boost in alcoholic beverage spending, particularly in terms of pricey brands, has been welcomed as an indicator of continued economic prosperity: Just as sales of cheap liquor brands soared during the height of the recession and increased spending on top-shelf products is seen as a sign of consumer confidence.

Consumers Drinking More Craft Beer (Even in Cans)

While overall beer sales have remained stagnant, one tiny segment of the market—craft beer—has grown substantially. Last year, craft beer posted a 15% increase in sales in the U.S. Bloomberg reports that as of 2010, there were 1,693 breweries in the U.S., a 2000% increase from the mid-’80s. Beer-loving hipsters, who love PBR and craft beers alike in the can, have helped the can regain preeminence in the beer market: In 2011, cans accounted for 53% of beer sales, up from 48% during the import-in-a-bottle-loving mid-’00s.

Consumers are Spending a Lot More on Alcoholic Beverages in Restaurants

The other eye-opening difference presented in NPR’s alcohol report concerns prices changes on alcohol consumed at home versus at bars and restaurants. Store prices on beer, wine, and liquor have actually come down over the past 30 years. As production has become more efficient, prices at the store have declined 39% from 1982 to 2012, after adjusting for inflation. Drinks ordered at bars and restaurants, on the other hand, have increased a whopping 79% during that same time period. Rising costs of labor and rent at bars and restaurants, as well as an increased focus on alcohol over food for revenues, are some of the reasons cited for the dramatic difference. Unsurprisingly, a much larger proportion of consumers‘ overall alcohol expenditures go to bars and restaurants nowadays. In 1982, just 24% of our alcoholic beverages money was spent at bars and stores; today, that figure is up to 40%.

Time Magazine June 2012.

With production at 13,235,917 barrels (bbls) in 2012, craft brewers reached 6.5 percent volume of the total U.S. beer market, up from 5.7 percent the previous year. Additionally, craft dollar share of the total U.S. beer market reached 10.2 percent in 2012, as retail dollar value from craft brewers was estimated at $10.2 billion, up from $8.7 billion in 2011.

“Beer is a $99 billion industry to which craft brewers are making a significant contribution, with retail sales share hitting double digits for the first time in 2012,” said Paul Gatza, director of the Brewers Association. “Small and independent brewers are consistently innovating and producing high-quality, flavor-forward craft brewed beer. Americans are not only responding to greater access to these products, but also to the stories and people behind them.”

In 2012, there was an 18 percent increase in the number of U.S. operating breweries, with the total count reaching 2,403. This count includes 409 new brewery openings and only 43 closings. Small breweries created an estimated 4,857 more jobs during the year, employing 108,440 workers, compared to 103,583 the year prior.

“On average, we are seeing slightly more than one craft brewery per day opening somewhere in the U.S. and we anticipate even more in the coming year. There is clearly a thirst in the marketplace for craft brewed beer, as indicated by the continued growth year after year,” added Gatza. “These small breweries are doing great things for their local communities, the greater community of craft brewers, our food arts culture and the overall economy.”

GuestMetrics LLC collects data from tens of thousands of restaurants and turns that data into regular reports. According to its most recent report, based on POS sales in restaurants and bars, IPAs displayed the strongest growth and market share gains of all the various types of beer in 2012 in the on-premise channel.

Of more than 25 different types of beer classifications GuestMetrics has in its system, IPA's showed 39 percent growth compared to the prior year, and in terms of share of the overall beer category, it also displayed the largest gain at about 55 basis points.

“While IPA is still quite small at just 1 percent of all beers sold in on-premise, our data indicates thus far in 2013, India Pale Ale’s strength has actually picked up some additional strength, growing units at 40 percent compared to the prior year, and achieving around a 70 basis point share gain,” said Bill Pecoriello, chief executive officer of GuestMetrics.

Now, these results may require a grain of salt because, based on its data, GuestMetrics said the IPA brands with the largest share gains last year were Widmer Broken Halo IPA, Lagunitas India Pale Ale, Sierra Nevada Torpedo Extra IPA and Ballast Point Sculpin. Widmer Broken Halo is no longer in production – so there is that. Nevertheless, the info from the company’s report results could generally reflect the broader trends being seen in the industry.

OUR PRODUCTS, ACQUISITIONS AND ALLIANCES

OUR PRODUCTS

For most of 2012 until January 31, 2013, the Company’s products were predominantly concentrated on tequila sales. Subsequent to the loss of our tequila license, the following brands have taken over as the main products being offered.

“Day of the Dead Craft Beer’s” Iconic artwork is produced bythe artist Sean Younis Wells who designed the label artwork for the award-winning national beer brand Day of the Dead Craft Beer and for La Catrina Wine. Both product lines have a Day of the Dead theme.

For 300 years the Aztecs honored the deceased in an annual celebration called Day of the Dead. The ceremony would involve using parts of the skeleton, most commonly the skull where relatives would place native Marigolds in the eye sockets to reflect the life that once was present.

Today, this festive holiday is a celebration of life. Many celebrants decorate in the joyful colors of the Mexican roots, paint faces and sing to wake the dead. Day of the Dead Craft Beer is made to celebrate life and honor the traditions of this great holiday.

The labels include images from Mrs. Wells' original acrylic paintings that were recently exhibited in the Canyon Road gallery De La Serna Fine Arts Studio & Gallery in Santa Fe, N.M and additional national exhibits are pending. A well-known painter throughout the southwest, Mrs. Wells also produces and hosts a television show, "New Mexican Santera," on the regional art form of retablo painting.

"The labels are the first things that consumers comment on. We get calls on a regular basis asking for posters, etc. We are planning to make reproductions of the original art and using them to advertise throughout the industry," said Jospeh Belli, VP Sales Day of the Dead Craft Beer.

Day of the Dead Craft Beer is an authentic Mexican beer brewed at a Mexican owned brewery Cerveceria Mexicana, whose packaging depicts this Mexican holiday and offers six variations including; Death Rides A Pale Horse Blonde Ale, Immortal Beloved Hefeweizen, Death Becomes Her Amber Ale, Queen of the Night Pale Ale, Immortal Beloved IPA and Pay The Ferryman Porter.

“Mexicali” is the flagship pilsner of Cerveceria Mexicana. The original formulation is a bright golden yellow in color. The aroma is of sweet malt, lightly floral and hoppy. The flavor reflects its hop bitterness; slightly sweet and just a perfect balance of two row barley malt, Chinook, Mt. Hood and Peerless hops that culminate to a very clean and semi-dry finish.

Mexicali light offers a more subtle experience. This beer is very bright pale golden in color with an aroma that is lightly sweet with obvious hops in the background. The flavor offers the bitterness from the hops, lightly sweet malt, smooth, light bodied and good carbonation making this a very refreshing and drinkable beer.

Mexicali Dark is a more complex offering. The color is bright, clear, dark brown. The aroma is lightly sweet, pleasant toasted malt, with a slightly coffee background. The flavor is a wonderful balance of roasted malt with a bit of sweetness, nice bitterness from the hops. This medium bodied dark beer has great carbonation and finishes with strength and a great aftertaste.

“Rio Bravo” is a pilsner with a bright golden yellow in color. The aroma is of sweet malt, lightly floral and hoppy. The flavor reflects its hop bitterness; slightly sweet and just a perfect balance of two row barley malt, Chinook, Mt. Hood and Peerless hops that culminate to a very clean and semi-dry finish.

Red Pig Mexican Ale is a craft brew. Bright, deep red copper in color, this ale is very aromatic with an intensely floral-hoppy, lightly sweet and malty scent. This full bodied ale offers a very pleasant high bitterness, with smooth sweet malt character, creamy head with good carbonation, and with an excellent bitter sweet finish.

Chili Beer is a unique brew with a bright pale golden yellow in color. It’s very aromatic, with a distinctive great, green chili in vinegar aroma, with a lightly sweet background. The flavor is pleasantly hot chili in vinegar accompanied with the light sweet grain character. It has a very light bitter finish, medium body and good carbonation.

ACQUISITIONS

Drinks Americas mission is to identify and invest the majority of our brand-building resources on those with the greatest growth potential such as Day of the Dead Craft Beer.

MARKETING, SALES AND DISTRIBUTION

MARKETING

Drinks Americas (DKAM) brands continues to forge strong connections with consumers through some of the largest retailers and restaurant chains in the country.

Day of the Dead Craft Beer is now available in over 20 U.S. chain retailers (such as Whole Foods, Cost Plus World Market, Walgreens, Sprouts, Total Wines) represented by over 40 distributors and available in over 48 states.

Examples of these are:

Classico is the distributor that has made Day of the Dead Draft Beer available in Arizona.

Prime Wine & Spirits has taken five of the six and has already secured some of the biggest chain retailers in the state. Such as Kroger, Cost Plus, Total Wine,Jax Beer& Wine, Smyrna World of Beverage, J's Beverage, Five Points Bottle Shop, Habersham Beverage and Savannah Market.

Life on Tap DRAFT Magazinein Voted on 2013 Top Beers of the year. Day of the Dead Pay the Ferryman Porter was declared a winner. Furthermore, the beer received a rating of 93, which was one of the highest scores.

Since their roll out in Floridawith Republic National Distributing Company (RNDC), the brand is now available in over 700 accounts, including Cost Plus, Fresh Markets, Disney, World of Beer, 7-11's, Mexican restaurants and other independents. RNDC is working diligently on supporting the market with presences at beer festivals, tastings and gaining placement at well-known retail chains.

We have partnered with some of the biggest names in the industry such as Southern Wine and Spirits and we have also signed with distributors who have chosen to take us as their first beer to distribute such as Classico Wine and Spirits.

Mexican Day of the Dead Craft Beer has landed the cover of national culinary-travel magazine SAVEUR. Noted as one of The Saveur 100, Day of the Dead Craft Beer will be included in its 20th Anniversary Edition out in the January/February 2014 issue.

SAVEUR is the definitive culinary and culinary-travel magazine of its generation. It has been honored with four American Society of Magazine Editors awards, including one for general excellence, and 17 James Beard journalism awards. SAVEUR is a magazine for people who experience the world food first.

Created to satisfy the hunger for genuine information about food in all its contexts, SAVEUR emphasizes heritage and tradition, home cooking and real food, evoking flavors from around the world, including forgotten pockets of culinary excellence in the United States. It celebrates the cultures and environments in which dishes are created and the people who create them. It serves up rich, satisfying stories that are complex, defining and memorable.

"Saveur's recognition of the complex quality and taste of our entire authentic Mexican Day of the Dead Craft Beer line – 6 in total - is extremely exciting. Our ability to win over not only craft beer connoisseurs and spirits distributors but also well-respected national food and travel critics speaks volumes to craftsmanship of Day of The Dead."

The production and marketing of our licensed and proprietary alcoholic and nonalcoholic beverages are subject to the rules and regulations of various Federal, provincial, state and local health agencies, including in particular the U.S. Food and Drug Administration (“FDA”) and the U.S. Alcohol and Tobacco Tax and Trade Bureau (“TTB”). The FDA and TTB also regulate labeling of our products. From time to time, we may receive notification of various technical labeling or ingredient reviews with respect to our products. We believe that we have a compliance program in place to ensure compliance with production, marketing and labeling regulations on a going-forward basis. There are no regulatory notifications or actions currently outstanding.

TRADEMARKS, FLAVOR CONCENTRATE TRADE SECRETS AND PATENTS

We own a number of trademarks, including, in the United States, “Drinks Americas” (TM (TM), “Cohete” (TM), “Swiss T”(TM), “Screaming Monkey” (TM) and, Casa BoMargo (TM). Trademarks have been filed and pending with no opposition for Drinks Americas (TM), “Monte Verde”(TM) and “Corcovado”(TM). In addition, we have trademark protection in the United States for a number of other trademarks for slogans and product designs, including “The Rooster Has Landed”(R), “Party Harder”(TM).

We consider our trademarks, patent and trade secrets to be of considerable value and importance to our business. No successful challenges to our registered trademarks have arisen and we have no reason to believe that any such challenges will arise in the future.

COMPETITION

The beverage industry is highly competitive. We compete with other beverage companies, most of which have significantly more sales, significantly more resources and which have been in business for much longer than we have. We compete with national and regional beverage producers and "private label" suppliers. Some of our alcohol competitors are Diageo, Pernod Ricard, Brown-Forman, Castle Brands, Allied Biomes and Bacardi & Company, Ltd. As a result, we believe opportunities exist for smaller companies to develop high-quality, high-margin brands, which can grow to be very attractive acquisition candidates for the larger companies.

EMPLOYEES & CONTRACTORS

We have two full-time employees and twenty five independent contractors. All employees are at-will employees and are not represented by a labor union. All independent contractors are at-will contractors that have executed non-disclosure agreements with us.

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below as well as other information provided to you in this Annual Report, including information in the section of this document entitled “Forward Looking Statements.” The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial may also impair our business operations. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected, the value of our common stock could decline, and you may lose all or part of your investment.

Risks Related to our Business

WE ARE A DEVELOPING COMPANY AND OUR PROSPECTS MUST BE CONSIDERED IN LIGHT OF OUR SHORT OPERATING HISTORY AND SHORTAGE OF WORKING CAPITAL

We are a developing company with a short operating history. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by developing companies, including dealing with a shortage of necessary funds in the very competitive marketplace in which the alcoholic and non-alcoholic beverage business is carried on, as well as the many risks commonly anticipated or experienced by mature companies. Our ability to operate as a going concern and to achieve profitable operations will be dependent on such factors as the success of our business model and marketing strategy, market penetration of existing products, competition, future brand additions, continued development of distribution relationships and the availability of financing. No assurance can be given that we will be able successfully to develop our business under the foregoing conditions.

WE RELY HEAVILY ON OUR INDEPENDENT DISTRIBUTORS, AND THIS COULD AFFECT OUR ABILITY TO EFFICIENTLY AND PROFITABLY DISTRIBUTE AND MARKET OUR PRODUCTS, AND MAINTAIN OUR EXISTING MARKETS AND EXPAND OUR BUSINESS INTO OTHER GEOGRAPHIC MARKETS.

Our ability to establish a market for our brands and products in new geographic distribution areas, as well as maintain and expand our existing markets, is dependent on our ability to establish and maintain successful relationships with reliable independent distributors strategically positioned to serve those areas. Many of our larger distributors sell and distribute competing products, including non-alcoholic and alcoholic beverages, and our products may represent a small portion of their business. To the extent that our distributors are distracted from selling our products or do not expend sufficient efforts in managing and selling our products, our sales will be adversely affected. Our ability to maintain our distribution network and attract additional distributors will depend on a number of factors, many of which are outside our control. Some of these factors include: (i) the level of demand for our brands and products in a particular distribution area; (ii) our ability to price our products at levels competitive with those offered by competing products; and (iii) our ability to deliver products in the quantity and at the time requested by distributors.

There can be no assurance that we will be able to meet all or any of these factors in any of our current or prospective geographic areas of distribution. Further, shortage of adequate working capital may make it impossible for us to do so. Our inability to achieve any of these factors in a geographic distribution area will have a material adverse effect on our relationships with our distributors in that particular geographic area, thus limiting our ability to maintain and expand our market, which will likely adversely affect our revenues and financial results.

WE GENERALLY DO NOT HAVE LONG-TERM AGREEMENTS WITH OUR DISTRIBUTORS, AND WE EXPEND SIGNIFICANT TIME AND MAY NEED TO INCUR SIGNIFICANT EXPENSE IN ATTRACTING AND MAINTAINING KEY DISTRIBUTORS.

Our marketing and sales strategy presently, and in the future, will rely on the performance of our independent distributors and our ability to attract additional distributors. We have entered into written agreements with certain of our distributors for varying terms and duration; however, most of our distribution relationships are informal (based solely on purchase orders) and are terminable by either party at will. We currently do not have, nor do we anticipate in the future that we will be able to establish, long-term contractual commitments from many of our distributors. In addition, despite the terms of the written agreements with certain of our significant distributors, we have no assurance as to the level of performance under those agreements, or that those agreements will not be terminated. There is also no assurance that we will be able to maintain our current distribution relationships or establish and maintain successful relationships with distributors in new geographic distribution areas. Moreover, there is the additional possibility that we will have to incur significant expenses to attract and maintain key distributors in one or more of our geographic distribution areas in order to profitably exploit our geographic markets. We may not have sufficient working capital to allow us to do so.

BECAUSE OUR DISTRIBUTORS ARE NOT REQUIRED TO PLACE MINIMUM ORDERS WITH US, WE NEED TO CAREFULLY MANAGE OUR INVENTORY LEVELS, AND IT IS DIFFICULT TO PREDICT THE TIMING AND AMOUNT OF OUR SALES.

Our independent distributors are not required to place minimum monthly, quarterly or annual orders for our products. In order to reduce their inventory costs, our independent distributors maintain low levels of inventory which, depending on the product and the distributor, range from 15 to 45 days, of typical sales volume in the distribution area. We believe that our independent distributors endeavor to order products from us in such quantities, at such times, as will allow them to satisfy the demand for our products in the distribution area. Accordingly, there is no assurance as to the timing or quantity of purchases by any of our independent distributors or that any of our distributors will continue to purchase products from us in the same frequencies and volumes as they may have done in the past. Our goal is to maintain inventory levels for each of our products sufficient to satisfy anticipated purchase orders for our products from our distributors, which is difficult to estimate. This places burdens on our working capital, which has been limited since we began operations. As a result, we have not consistently been able to maintain sufficient inventory levels and may not be able to do so in the future.

As is customary in the contract packing industry for small companies, we are expected to arrange for the production of our products sufficiently in advance of anticipated requirements. To the extent demand for our products exceeds available inventory and the capacities available under our contract packing arrangements, or orders are not submitted on a timely basis, we will be unable to fulfill distributor orders on a timely basis. Conversely, we may produce more products than warranted by actual demand, resulting in higher storage costs and the potential risk of inventory spoilage. Our failure to accurately predict and manage our contract packaging requirements may impair relationships with our independent distributors, which, in turn, would likely have a material adverse effect on our ability to maintain relationships with those distributors.

THE BANKRUPTCY, CESSATION OF OPERATIONS, OR DECLINE IN BUSINESS OF A SIGNIFICANT DISTRIBUTOR COULD ADVERSELY AFFECT OUR REVENUES, AND COULD RESULT IN INCREASED COSTS IN OBTAINING A REPLACEMENT.

If any of our primary distributors were to stop selling our products or decrease the number of cases purchased, our revenues and financial results could be adversely affected. There can be no assurance that, in the future, we will be successful in finding new or replacement distributors if any of our existing significant distributors discontinue our brands, cease operations, file for bankruptcy or terminate their relationship with us.

WE HAVE NOT SATISFIED CERTAIN OF OUR COMMITMENTS UNDER DISTRIBUTION AGREEMENTS, WHICH ENTITLE US TO DISTRIBUTE CERTAIN OF OUR PRODUCTS. IF ANY OF THESE AGREEMENTS WERE CANCELLED IT WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

Our rights to distribute certain of our products are generally governed by distribution agreements which contain minimum sales targets and other requirements some of which we have not satisfied to date. Therefore virtually all of our distribution contracts can be cancelled. We rely on our relationships with the parties who have granted us distribution rights rather than contractual protection. Cancellation of one or more of our distribution contracts would have a material adverse effect on our business.

WE NEED TO EFFECTIVELY MANAGE OUR GROWTH AND THE EXECUTION OF OUR BUSINESS PLAN. ANY FAILURE TO DO SO WOULD NEGATIVELY IMPACT OUR RESULTS.

To manage operations effectively, we must improve our operational, financial and other management processes and systems. We have a small staff and our success also depends on our ability to maintain high levels of employee efficiency, to manage our costs in general and administrative expense in particular, and otherwise to efficiently execute our business plan. We need to cost-efficiently add new brands and products, develop and expand our distribution channels, and efficiently implement our business strategies. There are no assurances that we will be able to effectively and efficiently manage our growth. Any inability to do so could increase our expenses and negatively impact the results of our operations.

WE HAVE A HISTORY OF LOSSES WHICH RAISE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

Because we have incurred significant losses from operations since inception, there is a substantial doubt about our ability to continue as a going concern. If we continue to generate significant losses we may not be able to continue as a going concern.

THE LOSS OF KEY PERSONNEL WOULD DIRECTLY AFFECT OUR EFFICIENCY AND ECONOMIC RESULTS.

Our management team consists of several key executives and several key distribution, marketing and financial personnel who provide services to us as independent contractors. In order to manage and operate our business successfully in the future, it will be necessary to further strengthen our management team. The hiring of any additional executives will increase our compensation expense. We may not have sufficient working capital to be able to do so.

OUR STRATEGY REQUIRES US TO DEVELOP AND MAINTAIN RELATIONSHIPS WITH OTHER FIRMS.

Our strategy depends on various relationships with other firms for product development, research facilities, distilling facilities, bottling, distribution and low-cost marketing. Because of these relationships, we do not expect to invest heavily in fixed assets or factories. Of particular importance to us is our relationship with independent producers who manufacture our products, typically, pursuant to our specifications. We do not have our own production capacity and rely on independent contractors to produce our products. We will need to maintain and develop relationships with additional manufactures as we add products to our product mix. It is vital to our success that our producers deliver high quality products to us with favorable pricing terms. There can be no assurance, however, that we will be able to develop and maintain relationships which provide us the services and facilities we require. If we fail to develop and maintain such relationships, we may be forced to change our strategy, which could have a material adverse effect on the results of our operations. Further, if our relationship with a producer of any of our products is terminated, it is likely our business will be disrupted until a replacement producer is identified and production commences.

OUR BUSINESS AND FINANCIAL RESULTS DEPEND ON MAINTAINING A CONSISTENT AND COST-EFFECTIVE SUPPLY OF RAW MATERIALS.

Raw materials for our products include concentrate, glass, labels, flavoring, caps and packaging materials. Currently, we purchase our flavor concentrate from two flavor concentrate suppliers. We believe that we have adequate sources of raw materials, which are available from multiple suppliers, and that in general we maintain good supplier relationships. The price of our concentrates is determined through negotiation with our flavor houses, and may be subject to change. Prices for the remaining raw materials are generally determined by the market, and may change at any time. Increases in prices for any of these raw materials could have a material adverse impact on our ability to achieve profitability. If we are unable to continue to find adequate suppliers for our raw materials on economic terms acceptable to us, it will adversely affect our results of operations.

WE MAY NOT BE ABLE TO ACQUIRE AND SUCCESSFULLY INTEGRATE ADDITIONAL PRODUCTS IN THE FUTURE.

We have grown our business primarily through acquisitions of brands and, if we have the working capital necessary to do so, we expect to acquire additional brands in the future. There can be no assurance that we will be able to acquire additional products or assimilate all of the products we do acquire into our business or product mix. Acquisitions can be accompanied by risks such as potential exposure to unknown liabilities relating to the acquired product or business. We have entered into, and may continue to enter into, joint ventures, which may also carry risks of liability to third parties.

Failure to protect our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our trademarks, patents, copyrights and trade secrets, could result in the expenditure of significant financial and managerial resources. We regard our intellectual property, particularly our trademarks and trade secrets to be of considerable value and importance to our business and our success. We rely on a combination of trademark, patent, and trade secrecy laws, and contractual provisions to protect our intellectual property rights. There can be no assurance that the steps taken by us to protect these proprietary rights will be adequate or that third parties will not infringe or misappropriate our trademarks, trade secrets (including our flavor concentrate trade secrets) or similar proprietary rights. In addition, there can be no assurance that other parties will not assert infringement claims against us, and we may have to pursue litigation against other parties to assert our rights. Any such claim or litigation could be costly and we may lack the resources required to defend against such claims. In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands, and profitably exploit our products.

WE HAVE LIMITED WORKING CAPITAL AND WILL NEED ADDITIONAL FINANCING IN THE FUTURE.

Our working capital needs in the future will depend upon factors such as market acceptance of our existing products and of any new products we launch, the success of our independent distributors and our production, marketing and sales costs. None of these factors can be predicted with certainty.

We have sustained substantial operating losses since our organization. We will need additional debt or equity financing in the future to fully implement our business plan. We may not be able to obtain any additional financing on acceptable terms or at all. As a result, we may not have adequate working capital to implement future expansions, maintain sufficient levels of inventory, and maintain our current levels of operation or to pursue strategic acquisitions. Our failure to obtain sufficient financing would likely result in the delay or abandonment of some or all of our development plans, any one of which would likely harm our business and the value of our common stock.

Risks Relating to our Industry

WE COMPETE IN AN INDUSTRY THAT IS BRAND-CONSCIOUS, SO BRAND NAME RECOGNITION AND ACCEPTANCE OF OUR PRODUCTS ARE CRITICAL TO OUR SUCCESS.

Our business is substantially dependent upon awareness and market acceptance of our products and brands by our targeted consumers. In addition, our business depends on acceptance by our independent distributors of our brands as beverage brands that have the potential to provide incremental sales growth rather than reduce distributors' existing beverage sales. Although we believe that we have made progress towards establishing market recognition for certain of our brands in both the alcoholic and non-alcoholic beverage industry, it is too early in the product life cycle of these brands to determine whether our products and brands will achieve and maintain satisfactory levels of acceptance by independent distributors and retail consumers.

COMPETITION FROM TRADITIONAL ALCOHOLIC AND NON-ALCOHOLIC BEVERAGE MANUFACTURERS MAY ADVERSELY AFFECT OUR DISTRIBUTION RELATIONSHIPS AND MAY HINDER DEVELOPMENT OF OUR EXISTING MARKETS, AS WELL AS PREVENT US FROM EXPANDING OUR MARKETS.

The beverage industry is highly competitive. We compete with other beverage companies, most of which have significantly more sales and significantly more resources, giving them significant advantages in gaining consumer acceptance for their products, access to shelf space in retail outlets and marketing focus by our distributors, all of whom also distribute other beverage brands. Our products compete with all beverages, most of which are marketed by companies with greater financial resources than what we have. Some of these competitors are or will likely in the future, place severe pressure on our independent distributors not to carry competitive alternative brands such as ours. We also compete with regional beverage producers and "private label" suppliers. Some of our alcoholic competitors are Diageo, Pernod Ricard, Castle Brands, Brown-Furman and Bacardi & Company, Ltd. Some of our direct competitors in the alternative beverage industry include Cadbury Schweppes (Snapple, Stewart, Nantucket Nectar, Mystic), Thomas Kemper, Boylans and Hansens. Competitor consolidations, market place competition, particularly among branded beverage products, and competitive product and pricing pressures could impact our earnings, market share and volume growth. If, due to such pressure or other competitive phenomena, we are unable to sufficiently maintain or develop our distribution channels, or develop alternative distribution channels, we may be unable to achieve our financial targets. As a means of maintaining and expanding our distribution network, we intend to expand the market for our products, and introduce additional brands. However, we will require financing to do so. There can be no assurance that we will be able to secure additional financing or that other companies will not be more successful in this regard over the long term. Competition, particularly from companies with greater financial and marketing resources than those available to us, could have a material adverse effect on our existing markets, as well as our ability to expand the market for our products.

WE COMPETE IN AN INDUSTRY CHARACTERIZED BY RAPID CHANGES IN CONSUMER PREFERENCES, SO OUR ABILITY TO CONTINUE DEVELOPING NEW PRODUCTS TO SATISFY OUR CONSUMERS' CHANGING PREFERENCES WILL DETERMINE OUR LONG-TERM SUCCESS.

Our current market distribution and penetration is limited as compared with the potential market and so our initial views as to customer acceptance of a particular brand can be erroneous, and there can be no assurance that true market acceptance will ultimately be achieved. In addition, customer preferences are also affected by factors other than taste, such as the recent media focus on obesity in youth. If we do not adjust to respond to these and other changes in customer preferences, our sales may be adversely affected.

A DECLINE IN THE CONSUMPTION OF ALCOHOL COULD ADVERSELY AFFECT OUR BUSINESS.

There have been periods in American history during which alcohol consumption declined substantially. A decline in alcohol consumption could occur in the future due to a variety of factors including: (i) a general decline in economic conditions, (ii) increased concern about health consequences and concerns about drinking and driving, (iii) a trend toward other beverages such as juices and water, (iv) increased activity of anti-alcohol consumer groups, and (v) increases in federal, state or foreign excise taxes. A decline in the consumption of alcohol would likely negatively affect our business.

WE COULD BE EXPOSED TO PRODUCT LIABILITY CLAIMS FOR PERSONAL INJURY OR POSSIBLY DEATH.

Although we have product liability insurance in amounts we believe are adequate, we cannot assure you that the coverage will be sufficient to cover any or all product liability claims. To the extent our product liability coverage is insufficient; a product liability claim would likely have a material adverse effect upon our financial condition. In addition, any product liability claim successfully brought against us may materially damage the reputation of our products; thus adversely affecting our ability to continue to market and sell that or other products.

OUR BUSINESS IS SUBJECT TO MANY REGULATIONS AND NONCOMPLIANCE IS COSTLY.

The production, marketing and sale of our alcoholic and non alcoholic beverages, including contents, labels, caps and containers, are subject to the rules and regulations of various federal, state and local health agencies. If a regulatory authority finds that a current or future product or production run is not in compliance with any of these regulations, we may be fined, or production may be stopped, thus adversely affecting our financial conditions and operations. Similarly, any adverse publicity associated with any noncompliance may damage our reputation and our ability to successfully market our products. Furthermore, rules and regulations are subject to change from time to time and while we monitor developments in this area, the fact that we have limited staff makes it difficult for us to keep up to date and we have no way of anticipating whether changes in these rules and regulations will impact our business adversely. Additional or revised regulatory requirements, whether regarding labeling, the environment, taxes or otherwise, could have a material adverse effect on our financial condition and results of operations.

THE CURRENT ECONOMIC EVENTS, INTERNATIONAL CONFLICTS, AND TERRORISM EVENTS ALL OR INDIVIDUALLY MAY HAVE AN ADVERSE IMPACT ON OUR SALES AND EARNINGS, AND OUR SHIPPING COSTS HAVE INCREASED.

We cannot predict the impact of the current economic climate in the United States, or the current international situation, on current and future consumer demand for and sales of our products. In addition, recent volatility in the global oil markets has resulted in rising fuel and freight prices, which many shipping companies are passing on to their customers. Our shipping costs have increased, and these costs may continue to increase. Due to the price sensitivity of our products, we do not anticipate that we will be able to pass these increased costs on to our customers.

Risks Related to our Common Stock

BECAUSE OUR COMMON STOCK IS CONSIDERED A "PENNY STOCK," A SHAREHOLDER MAY HAVE DIFFICULTY SELLING SHARES IN THE SECONDARY TRADING MARKET.

Our common stock is subject to certain rules and regulations relating to "penny stock" (generally defined as any equity security that has a price less than $5.00 per share, subject to certain exemptions). Broker-dealers who sell penny stocks are subject to certain "sales practice requirements" for sales in certain nonexempt transactions (i.e., sales to persons other than established customers and institutional "accredited investors"), including requiring delivery of a risk disclosure document relating to the penny stock market and monthly statements disclosing recent price information for the penny stocks held in the account, and certain other restrictions. For as long as our common stock is subject to the rules on penny stocks, the market liquidity for such securities could be significantly limited. This lack of liquidity may also make it more difficult for us to raise capital in the future through sales of equity in the public or private markets.

THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE, AND A SHAREHOLDER'S INVESTMENT IN OUR COMMON STOCK COULD SUFFER A DECLINE IN VALUE.

There could be significant volatility in the volume and market price of our common stock, and this volatility may continue in the future. Our common stock is listed on the OTCQB and there is a greater chance for market volatility for securities that trade on the OTCQB as opposed to a national exchange or quotation system. This volatility may be caused by a variety of factors, including the lack of readily available quotations, the absence of consistent administrative supervision of "bid" and "ask" quotations and generally lower trading volume. In addition, factors such as quarterly variations in our operating results, changes in financial estimates by securities analysts or our failure to meet our or their projected financial and operating results, litigation involving us, general trends relating to the beverage industry, actions by governmental agencies, national economic and stock market considerations as well as other events and circumstances beyond our control could have a significant impact on the future market price of our common stock and the relative volatility of such market price.

YOUR OWNERSHIP INTEREST, VOTING POWER AND THE MARKET PRICE OF OUR COMMON STOCK MAY DECREASE BECAUSE WE HAVE ISSUED, AND MAY CONTINUE TO ISSUE, A SUBSTANTIAL NUMBER OF SECURITIES CONVERTIBLE OR EXERCISABLE INTO OUR COMMON STOCK.

We have issued common stock, warrants, options and convertible notes to purchase our common stock to satisfy our obligations and fund our operations and reward our employees. In the future we may issue additional shares of common stock, options, warrants, preferred stock or other securities exercisable for or convertible into our common stock to raise money for our continued operations. We continue to seek additional investors. If additional sales of equity occur, your ownership interest and voting power in us will be diluted and the market price of our common stock may decrease.

In October 2009, James Sokol, a former salesperson for the Company, filed suit and an application for prejudgment remedy seeking in excess of $300,000.00 in unpaid wages, commissions and expenses against the Company and its Chief Executive Officer in the Superior Court for the Judicial District of Fairfield (Docket Number CV 09 5027925). In lieu of a prejudgment remedy, the Company provided the plaintiff with Company stock to be held subject to further order of the court, as security for the plaintiff’s claims. The matter settled in June 2010 and plaintiff withdrew the action and released the Company in exchange for $48,558.23 in cash payable in monthly installments, $50,000.00 worth of company stock, which the Company has delivered, and a promissory note in the amount of $47,129.64, which the Company has delivered and which remains outstanding to date.

In the Matter of Liquor Group Holding, LLC v. Drinks Americas Holdings, Ltd. (American Arbitration Association). In June 2009, Liquor Group Wholesale, Inc. (“Liquor Group”), a company that provided distribution services for us in several states, filed a claim for damages against us in Duval County Florida for alleged damages including breach of contract and sought damages. It was the Company’s opinion that the claim arose out of our termination of the agreements we had with them for their nonperformance, failure of the plaintiff to accurately report sales to the Company and their withholding of information required by the agreements. The Company filed a counterclaim of $500,000 for damages against Liquor Group and has denied their claimed breach of contract claim previously made against it. The Company contended that it is owed money by Liquor Group under the agreements. The matter was submitted to arbitration before the American Arbitration Association. The arbitrator found that Liquor Group inappropriately confiscated Drinks’ bailment inventory and breached the agreement. For breach of contract by Liquor Group, the arbitrator found Drinks damaged in the amount of $180,058.62, said sum to be trebled for breach of contract damages due Drinks of $540,175.86. Additionally, the arbitrator found Liquor Group responsible for any and all costs and expenses incurred by Drinks in enforcing its rights under the agreement including reasonable attorney’s fees of $120,605.15 and costs of $3,878.04, being a total owed of $664,659.05. On March 7, 2011, the Company successfully obtained an arbitration award in its favor in the sum $664,659.05 after filing a counterclaimed against Liquor Group Holding, LLC. The Company is currently exploring avenues for collection of the arbitration award. As of this printing, the Company has ceased legal action against the Liquor Group and are seeking a collections partner to assist in collects.

In December 2009, Niche Media, Inc., an advertising vendor filed suit against the Company in the Connecticut Superior Court for the Judicial District of Stamford/Norwalk (Docket Number CV 09-6002627-S) claiming unpaid invoices for the approximate amount of $130,000 plus accruing interest and attorneys’ fees. In March 2011, the Company reached settlement with Niche Media whereby payments for a balance of $90,000 will be paid over 29 months commencing on June 2011. As of the date hereof, the Company has stopped making timely payments in accordance with the settlement and expects to come to an agreement on the outstanding balance owed.

On June 18, 2010, Socius CG II, Ltd., (“Socius”), a creditor of the Company due to its purchase of various claims from other various creditors of the Company (“Creditor Claims”), filed a Complaint against the Company in the Supreme Court of the State of New York (the “Court”) for breach of contract to recover on the Creditor Claims (the “Socius Action”). On July 29, 2010, the Company entered into a settlement agreement with Socius pursuant to which the Company issued approximately 10,350 shares of the Company’s common stock (the “Settlement Shares”) in exchange for satisfaction of the Creditor Claims totaling $334,006 (the “Settlement”). In November 2011, Socius moved the Court for a Preliminary Injunction and Contempt Order (the “Socius Motion”) alleging that the Company had failed to comply the terms of the Settlement when, in sum, the Company had issued an insufficient number of Settlement Shares. Through Company and non-party affidavits and Memorandum of Law, the Company vigorously opposed the facts and legal arguments set forth in the Socius Motion (collectively, the “Opposition”). On February 28, 2012, the parties entered into a Stipulation of Settlement, which the Court “so Ordered” (the “Stipulation”). Pursuant to the Stipulation, the Company paid Socius $27,635.87 and agreed to satisfy all unpaid Creditor Claims in the aggregate amount of $109,474.77. Additionally, pursuant to the Stipulation, Socius surrendered for cancellation 13.837 shares of the Company’s Series B Preferred Stock, representing all issued and outstanding Series B Preferred Stock of the Company, and warrants to purchase 35,605 shares of the Company’s common stock, representing all warrants issued to Socius’ affiliate pursuant to that certain Preferred Stock Purchase Agreement, dated August 17, 2009.

In May 2011, Wenneker Distilleries (“Wenneker”), a distillery located in Holland, filed suit in the United States District Court for the Middle District of Pennsylvania seeking in excess of $225,894 in outstanding invoices owed to Wenneker pursuant to a certain Stock Purchase Agreement (the “SPA”), dated January 15, 2009, by and between the Company, Olifant USA, Inc. (“Olifant”), Jack McKenzie and Paul Walraven. Plaintiff claims that pursuant to the SPA, the Company is obligated to pay all of outstanding invoices owed to Wenneker by Olifant. The Company plans to vigorously defend this suit. To date, there has been no further action related to this suit.

Jeffrey Daub. This matter involves a claim by Jeffrey Daub, an ex-employee, for payment of deferred salary. The matter was settled with the Plaintiff agreeing to a payment plan containing fourteen payments with the final payment due September 1, 2012 for a total of $140,000. Balance due and accrued under this agreement as of April 30, 2013 and 2012 was $27,500 and $55,000, respectively.

Drinks Americas Holdings, Ltd. / Pabst Brewing Company (relating to the Company’s license to Rheingold beer). On April 10, 2012, Pabst Brewing Company (“Pabst”) issued a notice of default and subsequently issued a notice of termination and a cease and desist letter with respect to that certain License Agreement between the Company and Pabst, dated August 22, 1997, as amended. The Company responded rejecting the aforesaid notices and disputing the alleged default. The Company does not believe that Pabst has any valid legal grounds to terminate the Rheingold beer license. Negotiations with Pabst have ensued and are continuing. There is likelihood that litigation will be commenced if Pabst refuses to withdraw its default, termination and cease and desist notices. As of the date of printing we have returned to Pabst the Rheingold license.

Drinks Americas, Inc. / Samuel Bailey, Jr., et al. On April 5, 2012 Drinks Americas, Inc. filed a civil suit against three defendants, Samuel Bailey, Jr., Paul Walraven and Jack McKenzie in the Judicial District of Stamford, Connecticut (Docket Number FST-CV-11-6011590). Drinks claims that the parties breached a certain Settlement Agreement and General Release, dated, August 10, 2009 for failure to deliver shares of stock in Olifant USA, Inc. to Drinks, notwithstanding the receipt by the defendants from Drinks of a $75,000 cash payment and $20,000 worth of Drinks’ stock. The defendants do not dispute the receipt of the said $75,000 cash payment and $20,000 worth of stock but dispute Drinks’ claims that they owe any money or stock.

On July 26, 2013, the Circuit Court in the 12th Judicial Circuit in and for Sarasota County, Florida (the “Court”), entered an Order Granting Approval of Settlement Agreement (the “Order”) approving, among other things, the fairness of the terms and conditions of an exchange pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”), in accordance with a Settlement Agreement (the “Settlement Agreement”) between Drinks Americas Holdings, Ltd. (the “Company”) and IBC Funds, LLC, a Nevada limited liability company (“IBC”), in the matter entitled IBC Funds, LLC v. Drinks Americas Holdings, Ltd., Case No. 2013 CA 5705 (the “Action”). IBC commenced the Action against the Company to recover $327,131.65 of an unpaid Convertible Debenture of the Company, which IBC had purchased from the Company on October 15, 2012 (the “Claim”). The Order provides for the full and final settlement of the Claim and the Action. The Settlement Agreement became effective and binding upon the Company and IBC upon execution of the Order by the Court on July 26, 2013.

Pursuant to the terms of the Settlement Agreement approved by the Order, on July 26, 2013, the Company agreed to issue, in one or more tranches as necessary, that number of shares equal to $197,630.64 upon conversion to the Company’s common stock, $0.001 par value (the “Common Stock”) at a conversion rate equal to 35% of the lowest historical traded price of the Common Stock. We have continued to maintain the tranche schedule.

Other than the items discussed above, we believe that the Company is currently not subject to litigation, which, in the opinion of our management, is likely to have a material adverse effect on us.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES AND SMALL ISSUER PURCHASE OF EQUITY SECURITIES

MARKET INFORMATION

Our common stock was authorized to trade on June 2, 2005 on the over-the-counter market with quotations available on the OTCQB under the symbol "DKAM" on the Over-the-Counter marketplace. Prior to June 3, 2005, there was no public trading market for our Common Stock.

The following table sets forth the range of high and low bid quotations of our common stock for the periods indicated. The information contained in the table was obtained from Bloomberg Financial Services. The prices represent inter-dealer quotations, which do not include retail markups, markdowns or commissions, and may not represent actual transactions.

As of April 30, 2013, there were 30,942,180 shares of our common stock outstanding, which were held of record by approximately 580 stockholders, not including persons or entities that hold the stock in nominee or "street" name through various brokerage firms. Our transfer agent is Continental Stock Transfer & Trust Company, 17 Battery Place, New York, NY 10004.

DIVIDENDS

The payment of dividends, if any, is to be within the discretion of our Board of Directors. We presently intend to retain all earnings, if any, for use in our business operations and accordingly, the Board of Directors does not anticipate declaring any dividends in the near future. In addition, the terms of our Series A Preferred Stock limit our ability to pay cash dividends to our stockholders. Dividends, if any, will be contingent upon our revenues and earnings, capital requirements and financial condition.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

On August 16, 2012, the Company filed a registration statement on Form S-8 and registered 2,000,000 shares issuable under the Drinks Americas Holdings ltd. 2012 Incentive Stock Plan (the “2012 Plan”). As of the date hereof, the Company has issued a total of 2,000,000 shares of Company common stock under the plan as compensation for legal, consulting, and marketing services at a fair value of $400,000.

On June 3, 2011, the Company filed a registration statement on Form S-8 and registered 100,000 shares issuable under the Drinks Americas Holdings ltd. 2011 Consultants Plan (the “2011 Plan”). As of the date hereof, the Company has issued a total of 100,000 shares of Company common stock under the plan as compensation for legal and marketing services at a fair value of $67,500.

On January 6, 2011, the Company filed a registration statement on Form S-8 and registered 120,000 shares issuable under the 2011 Stock Incentive Plan (the “2011 Plan”). As of April 27, 2012, the Company has issued a total of 115,518 shares of Company common stock under the plan as compensation for legal and marketing services at a fair value of $170,837 and 4,482 shares remain available for future issuance under the 2010 Plan.

On April 13, 2010, the Company filed a registration statement on Form S-8 and registered 8,000 shares issuable under the 2010 Stock Incentive Plan (the “2010 Plan”). Subsequent to April 30, 2010, the Company has issued a total of 6,027 shares of Company common stock under the plan as compensation for legal and marketing services at a fair value of $114,272 and 1,973 shares remain available for future issuance under the 2010 Plan.

On November 6, 2009, the Company filed a registration statement on Form S-8 and registered 5,333 shares issuable under the 2009 Stock Incentive Plan (the “2009 Plan”). The Company has issued a total of 3,626 shares of Company common stock under the plan as compensation for legal and marketing services as of April 30, 2009 at a fair value of $316,450, which vested immediately upon grant. Additionally, 1,531 were issued subsequent to April 30, 2009 as compensation for legal and marketing services at a fair value of $65,667 and 177 shares remain available for future issuance under the 2009 Plan.

In January 2009, the Company’s shareholders approved the 2008 Stock Incentive Plan (the “2008 Plan”) which provides for awards of incentives of non-qualified stock options, stock, restricted stock and stock appreciation rights for its officers, employees, consultants and directors in order to attract and retain such individuals and to enable them to participate in the long-term success and growth of the Company. Under the 2008 Plan, 2,667 common shares were reserved for distribution, of which 2,593 have been issued and 193 remain available for future issuance. Of this amount, 120 shares issued to employees were subsequently canceled when the employees terminated their service with the Company. Stock options granted under the Plan are granted with an exercise price at or above the fair market value of the underlying common stock at the date of grant, generally vest over a four year period and expire 5 years after the grant date.

On November 9, 2009, the Company granted 933 shares under the 2008 Plan at fair value of $132,000 to several consultants, which vested immediately upon grant, as compensation for legal and marketing services.

On March 12, 2009, the Company granted an aggregated of 1,540 options under its 2008 Stock Incentive Plan to various employees, the directors of the Company, and to two consultants to the Company. The exercise price of the options granted to employees, directors, and one of the consultants was at the market value (other than those issued to our CEO which was at a 10% premium to the market value) of the underlying common stock at the date of grant. The exercise price of the options granted to the other consultant, $87.50, was above the fair market value of the underlying common stock at the date of grant. The value of the options on the date of grant was calculated using the Black-Scholes formula with the following assumptions: risk free rate-2%, expected life of options –5 years, expected stock volatility -67%, expected dividend yield -0%. The Company issued an aggregate of 1,113 options to purchase shares of its common stock to its employees including 667 to its former CEO, 133 to its former COO and 80 to its former CFO.

These options granted to employees of the Company vest over a four year period and expire five years after the grant date. The cost of the options, $375,750, is expected to be recognized over the four year vesting period of the non-vested options. The options awarded to the directors of the Company (267) and the consultants (160) at fair value of $129,000 vested immediately on the grant date.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model and is affected by assumptions regarding a number of highly complex and subjective variables including expected volatility, risk-free interest rate, expected dividends and expected term. Expected volatility is based on the historic volatility of the Company’s stock over the expected life of the option. The expected term and vesting of the option represents the estimated period of time until the exercise and is based on management’s estimates, giving consideration to the contractual term, vesting schedules and expectations of future employee behavior. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company has not paid dividends in the past and does not plan to pay any dividends in the near future. ASC 718 – Stock Based Compensation, also requires the Company to estimate forfeitures at the time of grant and revise these estimates, if necessary, in subsequent period if actual forfeitures differ from those estimates. The Company estimates forfeitures of future experience while considering its historical experience.

A summary of the options outstanding under the Plan as of April 30, 2013 and 2012 is as follows:

2013

2012

Shares

Weighted

Average

Exercise

Price

Shares

Weighted

Average

Exercise

Price

Outstanding at beginning of period

1,420

$

694.92

1,420

$

694.92

Granted

-

-

-

-

Forfeited

-

-

-

-

Outstanding at end of period

1,420

$

694.92

1,420

$

694.92

Exercisable at end of period

1,420

$

694.92

1,420

$

694.92

Weighted average fair value of grants during the period

$

-

$

-

RECENT SALE OF UNREGISTERED SECURITIES

There are no equity securities of the Company sold by us during the fiscal year ending April 30, 2013 that were not registered under the Securities Act of 1933, as amended, and have not previously been included in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.

PURCHASES OF EQUITY SECURITIES BY THE ISSUED AND AFFILIATED PURCHASERS

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the consolidated financial condition and results of operations should be read with "Selected Financial Data" and our consolidated financial statements and related notes appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under "Risk Factors" and elsewhere in this report.

RESULTS OF OPERATIONS

Year ended April 30, 2013 compared to year ended April 30, 2012.

Net Sales: For the year ended April 30, 2013, net sales were $3,483,353 compared to net sales of $4,395,296 for the year ended April 30, 2012 which level of volume was driven by the Company's wholesale business model. The decrease of approximately 21% is a result of the Company's inability to sell spirits licensed from WBI nationally and internationally. The Company's access to KAH Tequila was the primary driver of revenue growth for the Company until January 31, 2013. As of January 31, 2013, the Company defaulted on its license agreement with WBI and subsequently WBI stopped shipping its KAH tequila and all other products.

Gross Margin: Gross margin for the year ended April 30, 2013, was $766,338 or 22% of net sales under the Drinks WBI transaction compared to gross margin of $1,273,588, or 29% of net sales for the year ended April 30, 2012 under the wholesale business model. Margin has been maintained by the Company’s premium product selling strategy implemented by the company that targets premium price points, targeted non-price discounting promotion for its products and low overhead.

Selling, General and Administrative Expenses: Selling, general and administrative expenses for the year ended April 30, 2013 amounted to $3,898,882 compared to $2,346,502 for the same period of the prior year, an increase of approximately $1,552,380, or 66%, attributable to accrued settlement expenses of approximately $1,088,000, increased stock-based compensation of approximately $323,000, increased broker commissions of approximately $242,000, and increased bad debts of approximately $240,000.

Impairment of Intangible Assets: During the years ended April 30, 2013 and 2012 we performed an evaluation of our recorded book value of our intangible assets for purposes of determining the implied fair value of the assets at April 30, 2013 and 2012. The test indicated that the recorded remaining book value of our intangible assets associated with Rheingold Beer and Worldwide Beverage Imports exceeded their fair value for the year ended April 30, 2013 and 2012. As a result, upon completion of the assessment, we recorded a non-cash impairment charge of approximately $5,271,860, net of tax, or $0.17 per share during the year ended April 30, 2013 to reduce the carrying value to $0. Considerable management judgment is necessary to estimate the fair value. Accordingly, actual results could vary significantly from management’s estimates.

Loss on Settlement: During the year ended April 30, 2013, the Company incurred a loss on settlement of $1,739,888 due to the Notice of Default received in January 2013 from an Investor as compared to the previous year of $250,000 due to royalty termination payments.

Interest Expense: Interest expense for the year ended April 30, 2013 was $2,373,366 compared to $1,243,592 for the same period last year, an increase of $1,129,774 or 91%. This increase is predominantly due to an increase in the cost of financing our outstanding liabilities together with accrued interest on our Series A stock redemption.

Gain on Change in Fair Value of Derivative: During the year ended April 30, 2013, the Company recorded a gain on change in fair value of $573,574 related to convertible promissory notes containing embedded derivatives. During the year ended April 30, 2012, the Company settled promissory notes eliminating the derivative liability and accordingly recorded a gain on change in fair value of $1,671.

Gain on Deconsolidation of Subsidiary: During the years ended April 30, 2013 and 2012, there were $0 and $280,483 recorded as gain on deconsolidation of subsidiary. The Company had a majority interest in Olifant U.S.A., whose assets, liabilities, income and expenses were included in the Company's consolidated financial statements. During the year ended April 30, 2012, the Company agreed to return 42% of the capital stock of Olifant reducing its ownership interest to 48%, in exchange for the cancellation of the outstanding debt obligation and related accrued interest. The aggregate of the remaining noncontrolling interest less the carrying amount of the net assets of Olifant resulted in a gain of $280,483 and was recorded as a component of other income in the consolidated income statement for the year ended April 30, 2012.

Although management expects that our operations will be influenced by general economic conditions we do not believe that inflation has had a material effect on our results of operations.

SEASONALITY

As a general rule, the second and third quarters of our fiscal year (August-January) are the periods that we realize our greatest sales as a result of sales of alcoholic beverages during the holiday season. During the fourth quarter of our fiscal year (February-April) we generally realize our lowest sales volume as a result of our distributors decreasing their inventory levels, which typically remain on hand after the holiday season.

FINANCIAL LIQUIDITY AND CAPITAL RESOURCES

Our accompanying consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern. As of April 30, 2013, the Company has a stockholders' deficit of $22,911,844 applicable to controlling interests compared with a deficit of $11,246,719 applicable to controlling interests at April 30, 2012, and working capital deficiency of $22,912,276 as of April 30, 2013 and has incurred significant operating losses and negative cash flows since inception. For the year ended April 30, 2013, the Company sustained a net loss of $13,135,526 compared to a net loss of $2,538,967 for the year ended April 30, 2012 and used cash of approximately $662,000 in operating activities for the year ended April 30, 2013 compared with approximately $987,000 for the year ended April 30, 2012. We have converted certain liabilities into equity. The accompanying consolidated financial statements do not include any adjustments relating to the classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the company be unable to continue in existence.

We will need to continue to manage carefully our working capital and our business decisions will continue to be influenced by our working capital requirements.

Net Cash used in Operating Activities: Net cash used in operating activities for the year ended April 30, 2013 was $661,995, primarily from our loss of $13,135,526, net with non-cash activities of $577,311 in stock based compensation, $1,739,888 of loss on settlement, $573,574 in gain on change in fair value of derivative, $2,087,752 in non-cash interest related to the Series A put liability, and $5,271,860 of impairment losses. Changes in operating assets, liabilities and sundry and other non-cash activities were $3,370,294. We have to date funded our operations predominantly through loans from shareholders, officers and investors and additionally through the issuance of our common stock as payment for outstanding obligations.

Net Cash used in Investing Activities: Net cash used in investing activities for the year ended April 30, 2013 was $0.

Net Cash provided by Financing Activities: Net cash provided by financing activities for the year ended April 30, 2013 was $454,492 primarily from proceeds from notes of $420,000.

OFF BALANCE SHEET ARRANGEMENTS

Not applicable.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are more fully described in to the audited financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities. Actual results could differ from those estimates under different assumptions or conditions. We believe that the following critical accounting policies are subject to estimates and judgments used in the preparation of the financial statements.

REVENUE RECOGNITION

The Company recognizes revenues when title passes to the customer, which is generally when products are shipped. The Company recognizes royalty revenue based on its license agreements with its distributors which typically is the greater of either the guaranteed minimum royalties payable under our license or a royalty rate computed on the net sales of the distributor shipments to its customers.

The Company recognizes revenue dilution from items such as product returns, inventory credits, discounts and other allowances in the period that such items are first expected to occur. The Company does not offer its clients the opportunity to return products for any reason other than manufacturing defects. In addition, the Company does not offer incentives to its customers to either acquire more products or maintain higher inventory levels of products than they would in ordinary course of business. The Company assesses levels of inventory maintained by its customers through communications with them. Furthermore, it is the Company's policy to accrue for material post shipment obligations and customer incentives in the period the related revenue is recognized.

ACCOUNTS RECEIVABLE

Accounts receivable are recorded at original invoice amount less an allowance for uncollectible accounts that management believes will be adequate to absorb estimated losses on existing balances. Management estimates the allowance based on collectability of accounts receivable and prior bad debt experience. Accounts receivable balances are written-off upon management's determination that such accounts are uncollectible. Recoveries of accounts receivable previously written off are recorded when received. Management believes that credit risks on accounts receivable will not be material to the financial position of the Company or results of operations at April 30, 2013 and 2012 the allowance for doubtful accounts was $0 and $138,491, respectively.

INVENTORIES

Inventories are valued at the lower of cost or market, using the first-in first-out cost method. The Company assesses the valuation of its inventories and reduces the carrying value of those inventories that are obsolete or in excess of the Company’s forecasted usage to their estimated net realizable value. The Company estimates the net realizable value of such inventories based on analysis and assumptions including, but not limited to, historical usage, expected future demand and market requirements. A change to the carrying value of inventories is recorded to cost of goods sold.

The costs of intangible assets with determinable useful lives are amortized over their respectful useful lives and reviewed for impairment when circumstances warrant. Intangible assets that have an indefinite useful life are not amortized until such useful life is determined to be no longer indefinite. Evaluation of the remaining useful life of an intangible asset that is not being amortized must be completed each reporting period to determine whether events and circumstances continue to support an indefinite useful life. Indefinite-lived intangible assets must be tested for impairment at least annually, or more frequently if warranted. Intangible assets with finite lives are generally amortized on a straight-line bases over the estimated period benefited. The costs of trademarks and product distribution rights are amortized over their related useful lives of between 15 to 40 years. We review our intangible assets for events or changes in circumstances that may indicate that the carrying amount of the assets may not be recoverable, in which case an impairment charge is recognized currently.

During the year ended April 30, 2013 and 2012, the Company performed an evaluation of its intangible assets for purposes of determining the fair value of the assets at April 30, 2013 and 2012. The test indicated that the book value of certain intangible assets exceeded its fair value for the year ended April 30, 2013 and 2012. As a result, upon completion of the assessment, management recorded an impairment charge of $5,271,860 and $275,747 during the years ended April 30, 2013 and 2012, respectively. The carrying value was reduced to $0 as of April 30, 2013. Considerable management judgment is necessary to estimate the fair value. Accordingly, actual results could vary significantly from management’s estimates.

Deferred financing costs are amortized ratably over the life of the related debt. If debt is retired early, the related unamortized deferred financing costs are written off in the period debt is retired.

INCOME TAXES

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the results of operations in the period the new laws are enacted. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless, it is more likely than not, that such assets will be realized. The Company has recognized no adjustment for uncertain tax provisions.

STOCK BASED COMPENSATION

The Company accounts for stock-based compensation in accordance with ASC-718-10 using the modified prospective approach. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees and non-employees.

EARNINGS (LOSS) PER SHARE

The Company computes earnings (loss) per share under the provisions of ASC 260-10-45, Earnings per Share, whereby basic earnings (loss) per share is computed by dividing net income (loss) attributable to all classes of common shareholders by the weighted average number of shares of all classes of common stock outstanding during the applicable period. Diluted earnings (loss) per share is determined in the same manner as basic earnings (loss) per share except that the number of shares is increased to assume exercise of potentially dilutive and contingently issuable shares using the treasury stock method, unless the effect of such increase would be anti-dilutive. For the years ended April 30, 2013 and 2012, the diluted earnings (loss) per share amounts equal basic earnings (loss) per share because the Company had net losses and the impact of the assumed exercise of contingently issuable shares would have been anti-dilutive.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On December 5, 2012, Drinks Americas Holdings, Ltd. (the “Company”) dismissed Bernstein & Pinchuk LLP (“Bernstein”) as the Company’s independent registered public accounting firm which dismissal was ratified by the Company’s Board of Directors on January 22, 2013.

During the fiscal years ended December 31, 2011 and December 31, 2010, Bernstein’s reports on the Company’s financial statements did not contain an adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles.

During the fiscal years ended December 31, 2011 and December 31, 2010 and the subsequent interim period through December 5, 2012, (i) there were no disagreements between the Company and Bernstein on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of Bernstein, would have caused Bernstein to make reference to the subject matter of the disagreement in connection with its report on the Company’s financial statements; and (ii) there were no reportable events as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K.

On January 29, 2013, the Company provided Bernstein with a copy of the disclosures it is making in response to Item 4.01 on the Form 8-K filed on February 1, 2013, and has requested that Bernstein furnish it with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the above statements. A copy of the letter, dated January 29, 2013, was filed as Exhibit 16.1 on Form 8-K filed on February 1, 2013.

On January 22, 2013, the Company’s Board of Directors ratified the engagement of De Joya Griffith, LLC (“De Joya”) as its independent registered public accounting firm for the Company’s fiscal year ending April 30, 2013.

On April 10, 2014, De Joya Griffith, LLC (“De Joya”), the independent auditor of Drinks Americas Holdings, Ltd. (the “Company”), resigned as the Company’s independent auditor.

During from December 6, 2012 through April 10, 2014, the period during which De Joya was engaged as the Company’s independent registered public accounting firm for the fiscal year ended April 30, 2013 (the “Engagement Period”), De Joya did not issue any audit reports on the Company’s financial statements and, as such, did not issue any adverse opinion or disclaimer of opinion or any reports containing qualifications or modifications as to uncertainty, audit scope or accounting principles.

For the fiscal years ended April 30, 2013 and any subsequent interim period during the Engagement Period (i) there were no disagreements between the Company and De Joya on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of De Joya, would have caused De Joya to make reference to the subject matter of the disagreement in connection with its report on the Company’s financial statements; and (ii) there were no reportable events as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K.

During the years ended April 30, 2012 and the subsequent interim periods through December 6, 2012, the date of engagement of De Joya, the Company did not consult with De Joya regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements; or (ii) any matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K and the related instructions thereto) or a reportable event (as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K).

On May 9, 2014, the Company provided De Joya with a copy of the disclosures it is making in response to Item 4.01 on the Form 8-K filed May 12, 2014, and has requested that De Joya furnish it with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the above statements. A copy of the letter, dated May 9, 2014, was filed as Exhibit 16.1 on Form 8-K filed on May 12, 2014.

As of May 8, 2014, the Company’s Board of Directors ratified the April 25, 2014 engagement of LBB & Associates Ltd., LLP (“LBB”) as its independent registered public accounting firm for the Company’s fiscal year ending April 30, 2013.

During the years ended April 30, 2013 and the subsequent interim periods through April 25, 2014, the date of engagement of LBB, the Company did not consult with LBB regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements; or (ii) any matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K and the related instructions thereto) or a reportable event (as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K).

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC's rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure.

Our Chief Executive Officer and our Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of April 30, 2013, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of April 30, 2013, our Chief Executive Officer, who also is our principal executive officer, and our Chief Financial Officer, who is our principal financial officer, concluded that, as of such date, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be declared by us in reports that we file with or submit to the SEC is (1) recorded, processed, summarized, and reported within the periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that are intended to:

1.

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

2.

provide reasonable assurance that transactions are recorded as necessary to permit reparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

3.

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management's assessment of the effectiveness of the small business issuer's internal control over financial reporting is as of the year ended April 30, 2013. Based upon this assessment, the Company’s management concluded that there are material weaknesses affecting our internal control over financial reporting and have concluded that our internal control over financial reporting was not effective as of the end of the period covered by this report.

The matters involving internal controls and procedures that our management considers to be material weaknesses under COSO and Commission rules are: (1) lack of a functioning audit committee and lack of independent directors on our board of directors, resulting in potentially ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned potential material weaknesses were identified by our Chief Financial Officer in connection with the preparation of our financial statements as of April 30, 2013 who communicated the matters to our management and board of directors.

Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an effect on our financial results. However, the lack of a functioning audit committee and lack of a majority of independent directors on our board of directors, resulting in potentially ineffective oversight in the establishment and monitoring of required internal controls and procedures, can impact our financial statements.

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the SEC that permanently exempt smaller reporting companies.

There was no change in our internal control over financial reporting that occurred during the fiscal year ended April 30, 2013, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Below are the names and certain information regarding the Company’s executive officers and directors.

Name

Age

Positions and Offices (1) (2)

Timothy Owens

59

Chief Executive Officer and Chairman

Leonard Moreno

54

Board Member

(1)

Mr. Kenny resigned his positions with the Company on September 14, 2012. Mr. Millet resigned as director effective June 28, 2012. Mr. Traub passed away on July 11, 2012. Mr. Federico Cabo resigned his positions with the Company on November 27, 2012. Mr. Richard Cabo resigns his positions with the Company on November 27, 2012. Mr. Steven Dallas resigned his positions with the Company on January 15, 2013.

(2)

Mr. Charles Menzies was appointed to serves on the Board of Directors on January 16, 2013 and subsequently resigned on July 3, 2013.

Timothy Owens, age 59, has over 25 years acting as a financial consultant across various industries, such as real estate, electronics, biotech, and environmental. Since 2009, Mr. Owens, through his consulting company, TJO & Associates Financial and Consulting Services, specialized in investment services for developing, buying, selling and leasing commercial and residential real estate. From 2004 to 2009, Mr. Owens, as chief executive officer of Connect One World, designed, developed and integrated remote real time video security systems geared for use in homeland security. From 1999 to 2004, Mr. Owens served as chief executive officer of QT 5, Inc. (formerly a publicly traded corporation), a company focused on the design and development of medical in-vitro testing devices and a nationally distributed product called “Nico Water”.

Leonard Moreno, age 54, has been the director of Operations for Cerveceria Mexicana, S. De R.L. de C.V. for over twenty years. With a background in marketing and production in beer and other adult beverages he is focused on expanding brand awareness and the highest production standards.

Save as otherwise reported above, none of our directors hold directorships in other reporting companies and registered investment companies at any time during the past five years.

There are no family relationships among our directors or officers.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

To our knowledge, during the last ten years, none of our directors and executive officers (including those of our subsidiaries) has:

●

Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.

●

Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses.

●

Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities.

●

Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

●

Been the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and beneficial owners of more than 10% of our common stock to file with the SEC reports of their holdings of and transactions in our common stock. Based solely upon our review of copies of such reports and representations from reporting persons that were provided to us, certain of our officers and directors were late in filing a Form 3 or Form 4.

CODE OF ETHICS

The Company has adopted a written code of ethics that applies to the Company's principal executive officer, principal financial officer, principal accounting officer and any persons performing similar functions. The company also has an employee handbook that each employee must review and sign upon being hired. The Company will provide a copy of its code of ethics to any person without charge upon written request addressed to 25 W. Easy Street #306, Simi Valley, CA 93065.

CHANGES IN NOMINATING PROCESS

On March 5, 2013, the Board of Directors unanimously approved and authorized an amendment to the Company’s bylaws, pursuant to which the percentage vote required to remove any or all members of the Board was increased from a majority vote to a vote in favor of such removal by at least 66 2/3% vote of the combined voting power over the Company’s outstanding capital stock, and such change took effect immediately.

COMMITTEES OF THE BOARD

Our Board of Directors has established an Audit Committee, a Compensation Committee and a Financing Committee, however, currently Mr. Owens and Mr. Moreno are the only members of the Board of Directors.

The following table sets forth the annual and long-term compensation paid to our Chief Executive Officer and the other executive officers who earned more than $100,000 per year at the end of the last two completed fiscal years. We refer to all of these officers collectively as our “named executive officers.”

SUMMARY COMPENSATION TABLE

NAME AND

PRINCIPAL POSITION

FISCAL

YEAR

SALARY

($)

BONUS

($)

STOCK

AWARDS

($)

OPTION

AWARDS

($)

ALL OTHER

COMPENSATION

($)

TOTAL

($)

Timothy Owens

2013

$

68,000

$

-

$

80,100

$

-

$

-

$

148,100

Chief Executive Officer

2012

$

-

$

-

$

-

$

-

$

24,000

$

24,000

J. Patrick Kenny (1)

2013

$

-

$

-

$

120,700

$

-

$

-

$

120,700

2012

$

202,000

$

-

$

-

$

-

$

18,220

$

220,220

Charles Davidson

2013

$

-

$

-

$

60,350

$

-

$

-

$

60,350

Chief Operating Officer (2)

2012

$

109,566

$

-

$

-

$

-

$

7,200

$

116,766

(1)

Mr. Kenny has accrued substantial amounts of his salary (approximately $417,973) as of April 30, 2012. All other compensation for fiscal 2012 is comprised of personal medical insurance premiums, $6,959; life insurance, $2,861 and an automobile allowance, $8,400. Mr. Kenny resigned from his position as Chief Executive Officer of the Company on September 14, 2012.

(2)

Mr. Davidson has accrued amounts of his salary of (approximately) $12,962 as of April 30, 2012. All other compensation for fiscal year 2012 was comprised of an auto allowance of $7,200. Mr. Davidson resigned from his position as Chief Operating Officer of the Company on September 14, 2012.

In January 2009, the Company’s shareholders approved the 2008 Stock Incentive Plan (the “Plan”) which provides for awards of incentives of non-qualified stock options, stock, restricted stock and stock appreciation rights for its officers, employees, consultants and directors in order to attract and retain such individuals and to enable them to participate in the long-term success and growth of the Company. Stock options granted under the Plan are granted with an exercise price at or above the fair market value of the underlying common stock at the date of grant, generally vest over a four year period and expire 5 years after the grant date.

Also on March 12, 2009, the Company granted 78,333 shares of its common stock under the Plan to several of its employees as consideration for past services they have performed for the Company. The stock awards vested immediately upon grant. The stock we issued to our Named Executive Officers was valued based on the market price of the shares on the Over-The-Counter Bulletin Board on the date the shares were granted.

OUTSTANDING EQUITY AWARDS AT FISCAL 2013

The following table lists all outstanding equity awards held by each of the Named Executive Officers as of April 30, 2013.

Equity Awards

Stock Awards

Equity

Equity

Equity

Incentive

Incentive

Incentive

Number of

Number of

Plan Awards:

Plan Awards:

Plan Awards:

Unearned

Unearned

Number of

Market

Number of

Market Value

securities

securities

Securities

Number of

Value of

Unearned

Of Unearned

Underlying

Underlying

Underlying

Shares or

Stock

Shares, Units

Shares, Units

Unexercised

Unexercised

Unexercised

Option

Units of Stock

that

or Other

or Other

Options

Options

Unearned

Exercise

Option

That Have

Have Not

Rights That

Rights That

(#)

(#)

Options

Price

Expiration

Not Vested

Vested

Have Not

Have Not

NAME

Exercisable (1)

Inextricable

(#)

($)

Date (2)

(#)

($)

Vested (#)

Vested ($)

J. Patrick Kenny

-

-

667

660.00

03/11/14

-

-

-

$

-

(1) Options vest and become exercisable in four equal annual installments over the course of four years.

(2) The expiration date of each option occurs 5 years after the date of grant of each option.

DIRECTOR COMPENSATION

Compensation was paid to our directors for their services as directors of the Company for the fiscal year ended April 30, 2013.

The following table provides information about shares of common stock beneficially owned as of April 30, 2013 by:

● each of our directors, executive officers and our executive officers and directors as a group; and

● each person owning of record or known by us, based on information provided to us by the persons named below, to own beneficially at least 5% of our common stock;

Number of Shares

Of

Common Stock

Beneficially Owned

Percentage of

Outstanding

Shares

Name and Address of Beneficial Owner

Timothy Owens

533,726

1.72

%

Leonard Moreno

260,000

0.84

%

All Directors, Officers, and Management as a group (2 persons)

793,726

2.57

%

Jack Kleinert

c/o 424R Main Street

Ridgefield, CT 06877

1,363,837

4.41

%

Federico G. Cabo

4010 White Side St.

Los Angeles, CA, 90063

10,239,602

(2)

33.09

%

IBC Funds LLC

1170 Kane Concourse, Suite 404

Bay Harbour, Florida 33154

1,531,876

4.95

%

J. Patrick Kenny

3,827,708

(3)

12.37

%

* Less than 1%.

(2) Includes 10,229,602 shares owned by Worldwide Beverage Imports, LLC, an entity owned and controlled by Richard F. Cabo, and subsequently transferred to Jomex, LLC and entity owned and controlled by Federico Cabo.

(3) Includes 25,621 shares owned by Kenny LLC I, and 3,801,682 shares owned by Kenny LLC, entities controlled by Mr. Kenny, and 334 stock options, which have vested. Does not include 903,967 shares owned by Brian Kenny, Mr. Kenny’s son; 36 shares owned by Mr. Kenny’s daughter; and 52 shares owned by Mr. Kenny's brother; as to which shares Mr. Kenny disclaims beneficial ownership; or options to purchase 333 shares of our common stock which were granted to Mr. Kenny which will not be exercisable within 60 days of August 10, 2012.

Except as otherwise indicated each person has the sole power to vote and dispose of all shares of common stock listed opposite his name. Each person is deemed to own beneficially shares of Common Stock, which are issuable upon exercise of warrants or upon conversion of convertible securities if they are exercisable or convertible within 60 days of April 30, 2013. Except as otherwise indicated, none of the persons named in the table own any options or convertible securities.

EQUITY COMPENSATION PLAN INFORMATION

On August 16, 2012, the Company filed a registration statement on Form S-8 and registered 2,000,000 shares issuable under the Drinks Americas Holdings ltd. 2012 Incentive Stock Plan (the “2012 Plan”). As of the date hereof, the Company has issued a total of 2,000,000 shares of Company common stock under the plan as compensation for legal and marketing services at a fair value of $400,000.

A summary of the options outstanding under our Plans as of April 30, 2013 and 2012 is as follows:

2013

2012

Weighted

Weighted

Average

Average

Exercise

Exercise

Shares

Price

Shares

Price

Outstanding at beginning of period

1,420

$

694.92

1,420

$

694.92

Granted

-

-

-

-

Forfeited

-

-

-

-

Outstanding at end of period

1,420

$

694.92

1,420

$

694.92

Exercisable at end of period

1,420

$

694.92

1,420

$

694.92

Weighted average fair value of grants during the period

-

$

-

-

$

-

CHANGES IN CONTROL

There are no arrangements known to the Company, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.

Related parties can include any of our directors or executive officers, certain of our stockholders and their immediate family members. A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere, in any way with the interests of the company as a whole. Our code of ethics requires all directors, officers and employees who may have a potential or apparent conflict of interest to immediately notify his/her supervisor, who is responsible for consulting with the Chief Executive Officer or Chair of the Governance Committee of the Board of Directors, as appropriate. The Board of Directors has adopted rules for what activities constitute conflicts of interest and potential conflicts of interests, as well as procedures for determining whether a relationship or transaction constitutes a conflict of interest. The current version of these rules and procedures are set forth in our Code of Ethics.

Set forth below are descriptions of transactions with related persons for the fiscal year ended April 30, 2013 and April 31, 2012:

Inventory Purchase Orders

None

Licensing Agreement

In October 2005, the Company acquired ownership of a long-term license for (99 years) for the Rheingold trademark and other assets related to the Rheingold brand. Under this license agreement we are required to pay the licensor $3.00 per barrel for domestic sales and $10.33 for foreign sales. John Kleinert, a former Director on our Board of Directors, owns 30% of the Rheingold brand.

We incurred royalty expenses of approximately $0 and $6,386 in fiscal 2013 and 2012, respectively, to Alive Spirits LLC, in which we own 25 percent membership interest. Additionally, Mexcor paid the Company royalty fees of approximately $0 in connection with Old Whiskey River, Olifant and Damiana.

Line of credit

As of April 30, 2013 and 2012, the Company has an outstanding balance of $660,938 and $215,946, respectively on a $500,000 line of credit, unsecured at 18% per annum, and maturing August 30, 2013. The line of credit is provided by a current note holder and a former director of the Company.

Independence of Directors

The Board of Directors has determined that none of our directors are “independent directors” within the meaning of the applicable rules and regulations of the SEC and the director independence standards of NASDAQ.

Set forth below are the fees billed by the Company’s independent principal accountants for the past two years for services provided to the Company.

Audit and Audit-Related Fees

We engaged LBB & Associates Ltd., LLP (“LBB”) as our principal accountants to perform the audit of our financial statements for the years ended April 30, 2013 and 2012 (as restated). During the year ended April 30, 2013 we were billed $Nil. We engaged De Joya Griffith, LLC as our principal accountants to perform the audit of our financial statements for the year ended April 30, 2013. During the year ended April 30, 2013, we were billed $30,000. The $30,000 billed during the fiscal year ended April 30, 2013 is comprised of the following: $30,000, for three quarterly reviews. We engaged Bernstein & Pinchuk, LLP as our principal accountants to perform the audit of our financial statements for the year ended April 30, 2012. During the year ended April 30, 2012 we were billed $134,765. The $134,765 billed during the fiscal year ended April 30, 2012 is comprised of the following: $95,365, for the year ended April 30, 2011 audit; $28,000, for three subsequent quarterly reviews; $7,900 for tax review; and $3,500, for other reviews.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on January 16, 2015.

Drinks Americas Holdings, Ltd.

By: /s/ Timothy Owens

Timothy Owens

Chief Executive Officer

(Principal Executive Officer, Principal Financial Officer

and Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

We have audited the accompanying consolidated balance sheets of Drinks Americas Holdings, Ltd. (the “Company”) as of April 30, 2013 and 2012, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of April 30, 2013 and 2012, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the consolidated financial statements, the Company has suffered recurring losses from operations that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 4. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 3 under the caption “Restatement”, these consolidated financial statements have been restated to correct for certain errors.